Trade Routes and Global Supply Chains

Global maritime trade depends on a small number of narrow geographic chokepoints where shipping lanes converge, making these passages disproportionately important to the world economy relative to their modest physical size. The Strait of Malacca, between the Malay Peninsula and the Indonesian island of Sumatra, is the shortest sea route linking the Indian Ocean to the Pacific and carries an estimated quarter of all globally traded goods, including the large majority of oil shipped to China, Japan, and South Korea, making it a persistent focus of naval strategy and anti-piracy patrols. The Suez Canal, opened in 1869 and connecting the Mediterranean to the Red Sea, allows ships to bypass the long voyage around the Cape of Good Hope, and its strategic importance was demonstrated in March 2021 when the container ship Ever Given ran aground and blocked the canal for six days, disrupting an estimated nine billion dollars of trade per day. The Panama Canal, completed in 1914 and expanded in 2016 to accommodate larger "Neopanamax" vessels, links the Atlantic and Pacific and has faced its own disruptions, with severe drought in 2023 and 2024 forcing Panama Canal Authority restrictions on ship transits due to low water levels in the freshwater Gatun Lake that supplies the canal's locks. Other significant chokepoints include the Strait of Hormuz, through which roughly a fifth of global oil consumption passes from the Persian Gulf, and the Bab-el-Mandeb strait at the southern entrance to the Red Sea.